The Original Big K

Well, Big K, we hardly knew ye, and now you’re leaving us again. That’s right, the many Kmart stores which for some not well-explained reason took on the “Big K Mart” identity in the mid-90’s are being restored (thankfully) back to just “Kmart”, with a logo closer to their original 1960’s look, albeit with a single color, red. And a familiar sight to many Kroger shoppers is their age-old “Big K” private label brand, probably best recognized in recent decades on their soft drinks, but we’ll talk about that later.

Aside from these, however, was a Mid-South based chain by the name of Big K, which enjoyed a good deal of success as a regional discount store operation in the late 60’s and early 70’s. Big K was a division of Nashville-based Kuhn Brothers Company, Inc., which was founded as a variety store chain in the teens. The information I’ve been able to find about the Kuhn stores, which unfortunately is minimal, indicates that that they were very much cast in the standard Woolworth/Kresge variety store mold. As such they faced similar problems as those firms did in the fifties –footprints too small to accommodate a growing range of popular consumer goods, rising operating costs of counter service as opposed to self service, and most importantly the decline of downtown business districts with the advent of shopping centers with their vast availability of free parking.

In 1962, that historic year for the discount industry, Kuhn’s launched the first of their Big K discount department stores. Kuhn’s employed a strategy similar to Wal-Mart, opening the Big K stores in small-to-medium sized towns within a four-state market area – in their case Alabama, Kentucky, Tennessee and Georgia. Like Wal-Mart, they avoided the larger markets which were likely to be heavily populated with Kmart stores, as Atlanta most certainly was. Kuhn’s-Big K , as the company was renamed, would eventually adjoin the Wal-Mart market area, but there was very little overlap. The Kuhn family and Sam Walton, who were acquaintances, had chosen (for a time at least) to honor an old unwritten code between regional retailers to stay of each others’ territories. Of course another unwritten code, every bit as popular as the first, was to scrap the previous code and build right in your fellow retailer’s backyard. When Wal-Mart opened a store in Jackson, Tennessee, the heart of Big K-land, The Kuhns retaliated by opening stores in West Helena and Blytheville, Arkansas.

By the end of 1973, the company operated 57 Big K’s and 27 Kuhn’s Variety Stores, and had pushed into eastern Arkansas and Missouri, Wal-Mart’s operating area. The Big K stores carried the standard discount store mix of apparel, sporting goods, hardware, toys, etc., and averaged 45,000 square feet. There were three larger stores (65,000-75,000 square feet) ringing the Nashville area, the company’s home turf. In 1977, Kuhn’s-Big K moved into the South Carolina region with its acquisition of Edwards, Inc., a Charleston-based chain of 33 stores in South Carolina.

Soon after the Edwards purchase, the Kuhn’s - Big K operation spun into decline, losing money and experiencing management turmoil. In 1981, Chain Store Age characterized the company as “a broken chain”, citing increasingly intense competition, the strain from the Edwards acquisition and cost overruns on the company’s fancy new Nashville headquarters complex. The magazine was also critical of the Kuhn family’s management approach. Predictions of Big K’s demise were aflight.

Discussions regarding a possible acquisition by Wal-Mart had begun some months before the Chain Store Age article appeared. Wal-Mart, traditionally committed to internal growth, had only one major acquisition under its belt at the time, having purchased the 21-store Mohr Value chain, an Illinois operation, in 1977. When it became evident that Big K would be forced to sell out, the ideal store sizes (directly in line with Wal-Mart’s at the time), respectable customer base, and most of all the chain’s prime locations in new, adjoining territory made the proposition too powerful to resist. Even so, Wal-Mart’s board of directors was split down the middle over the idea. Sam cast the deciding vote in favor of the buyout, and the deal was done. Incidentally, Wal-Mart’s indecision over the buyout paid another dividend – as they hemmed and hawed over the prospect, the value of Big K’s stock continued to fall. The initial purchase price, according to the Wall Street Journal was $17 million in December 1980. By the following June it was $12.9 million, and by the time of the actual buyout in December 1981, it was $7 million - $2 million less than Kuhn’s -Big K had paid for the Edwards chain four years earlier. Sort of gives a new, unwanted meaning to the word “discount”.

The first photo, location unknown, is from 1973. The second and third photos are from the Dickson, Tennessee store and were taken the following year.

Wal-Mart Expands the "Magic Circle"

If Sam Walton harbored dreams of empire during Wal-Mart’s early years, he did a good job of keeping it to himself. That’s not to say he wasn’t interested in growth – he most certainly was, as is clearly evidenced throughout his autobiography. In Wal-Mart’s first decade and beyond though, the company flew under the radar, expanding slowly within the area that Walton called the “magic circle” – northern Arkansas, southern Missouri, southeastern Kansas and eastern Oklahoma. A typical retailer with a home base in northwest Arkansas could have reasonably been expected to try to plant their flag in Kansas City or St. Louis soon after their first flush of success, but Walton did not and wouldn’t for many years. In 1967, five years after the company’s founding, there were 18 Wal-Marts. By comparison Kmart, another retailer celebrating the five-year mark that year, had 250 stores.

Walton was much more interested in “growing internally”, saturating existing markets to create dominance. New markets were added incrementally, and only in areas that adjoined existing ones, to maximize efficiency. An early sign that this strategy was paying off came in the mid-70’s, as Kmart began to open stores within Wal-Mart’s market area. Until around 1974, Kmart rarely entered cities with a population below 50,000. At that point, they introduced a smaller store format and began to roll it out in various parts of the country. When Kmart entered such Wal-Mart strongholds as Springfield, Missouri and Hot Springs, Arkansas, Wal-Mart creamed them. It was a sign of things to come, on a much larger scale, in the coming decades.

Most importantly, Walton sought to improve the stores. As mentioned in the previous post, he relentlessly pursued competitive intelligence, trying to learn from the good and bad things chains across the country were doing. Conversely, he spent a great deal of time in the Wal-Mart stores, quizzing employees in his friendly but pointed manner, digging deeper if he sensed there was a problem. Walton practiced “management by walking around” long before Tom Peters and Robert Waterman made the phrase famous in the bestselling book “In Search of Excellence”.
At the close of 1970, Wal-Mart had 38 stores and $44 million in sales. Up to this point, a great deal of the financing had come from Sam Walton’s own family, leaving him $2 million in debt by that time. Reluctant to take on the scrutiny and hassles of going public, but weighed down by the heavy debt load and the realization that a stock offering was the only feasible way to keep expanding the company, Walton took the company public in October, 1970. In the space of one day, Sam was out of debt and would never have to personally contribute another dime to Wal-Mart’s expansion. The stock sold out immediately, and of course a major expansion ramp-up was to come. By 1974, Louisiana, Tennessee, Kentucky and Mississippi had received their first Wal-Mart stores.

Then Sam, age 56 at the time, did something that is not well-remembered today and in retrospect seems more than a little surprising. In November 1974, he resigned as Chairman and Chief Executive Officer of Wal-Mart and turned the reins of the company over to a younger man.

The new Wal-Mart chief was 40-year old Ron Mayer, a former Duckwall-ALCO executive who more recently was a Wal-Mart vice president, instrumental in setting up the first version of Wal-Mart’s vaunted computer infrastructure. Walton moved over into a new position, chairman of the executive committee, an oversight position in most companies. He even gave up his office to Mr. Mayer, moving down the hall and out of the way. Had things remained as they were, Sam would have had plenty of time to perfect his tennis game and bird hunting skills, and Wal-Mart would have probably become a decent-size regional player, and probably an eventual acquisition candidate for the likes of Kmart or Target, no offense to Mayer intended.

The vigorous Walton, try as he might, learned quickly that standing on the sidelines was not something he could do. In June 1976, Mayer stepped aside and Walton reassumed leadership of the company. Sam was frank when interviewed about it by the Wall Street Journal –Mayer had left “because I wasn’t able to assume a passive role… I wasn’t about to force myself to stay out” of the company’s decision process. Walton offered Mayer a vice chairmanship, but he declined and chose to leave the company instead. The founder was now back in charge. By the end of 1979, Wal-Mart had 278 stores, over a billion dollars in sales, and operated in 11 states. The magic circle was growing.

The photos above are from 1976, 1978 and 1979 respectively. These pictures remind me of the very first Wal-Mart store I ever laid eyes upon, around 1976, years before I (and much of America) learned of the company’s famous founder. In the early 70’s, my stepfather bought a small farm in rural west Tennessee. It was a rustic place, with a creaky old farmhouse without air conditioning. We’d spend about three weeks there every summer, and many years we would drive down the day after Christmas and spend the rest of our Christmas break there, trying to keep the pipes from freezing. The summers were definitely a shock to the system of this 12-year old Chicagoan, used to spending my vacations lying around the house, watching reruns of Petticoat Junction and Green Acres. Now I was digging postholes and sweating like I never had in my life. (Fresh Air! Bah. Of course now I look back at it as great experience, naturally.) The Wal-Mart location was in Martin, Tennessee, a college town, and was Wal-Mart’s third or fourth store in the state. I clearly remember thinking that it had to be the single store of a family-owned business. Regrettably, we never set foot in the place, and it would be years before I would experience the wonder of Wal-Mart.

The ABC's of Sears

One of the most significant keys to Sears’ success was the company’s ability to provide the appropriate size and type store for each community they did business in. General Wood, having successfully launched Sears’ initial entry into the retail store field, realized early on that a “one size fits all” approach wouldn’t work.

A strategy to develop three primary basic types of Sears stores was put in place. First there would be the “A” stores, termed by the company as “Complete Department Stores”. These stores were generally over 100,000 square feet and often approached 250,000 square feet, carrying the complete line of Sears merchandise. The A stores in the early postwar years were usually large, free-standing stores, with an auto center either attached or adjacent. As major shopping centers and large malls came into the picture in the 1950’s, the A stores were more often seen as part of those. The A stores were often of a more elaborate architectural design, especially in the very late fifties and throughout the sixties when a number of Sears store designs were strikingly impressive.

The second group, known of course as the “B” stores, were aptly called “Medium-Sized Department Stores”. The B category covered a wide range of store sizes, from footprints as small as 25,000 (or less) to the 100,000 square foot range. Here the merchandise mix varied widely as well, depending on local tastes, but usually with a strong emphasis on appliances and hard lines. This variance extended to the exterior design of the B stores. Many were as elaborate-looking as the A stores, while others were of more modest appearance. Like the A stores, most of the B’s were built as part of shopping centers or malls as the 1950’s rolled on. Some, not all, had auto centers. In the late 50’s, the “B-1” designation was created to differentiate the larger, more comprehensively stocked B stores.

The rationale for placing an A or a B store in a given location was often cut from a fine demographic cloth, and it was not at all uncommon for an A store to be placed in a major mall in a smaller town while a B store could be found in a smaller mall within a large city.

The “C” designation stood for “Smaller Hard Lines Stores”, and these primarily offered appliances, tools, sporting goods and automotive items. Far smaller than the other two store types, the C stores had much more of a plain “storefront” appearance and were typically found in urban street locations, rural downtown locations or in suburban strip shopping centers. A short-lived experiment in the 1970’s saw the addition of some clothing and soft lines to a handful of the larger, more remote C stores. These came to be known as “Z” stores. A small number of appliance-only “D” Stores existed for a time as well.

Most of these photos are from the 1958-59 timeframe. Top to bottom, the locations are: Memphis, Tennessee on Poplar Avenue (which is still a Sears), Ogden, UT, New Orleans, LA, Roanoke and Newport News, VA, Rockford, IL , Oklahoma City, OK (a bit older, circa 1955), St. Matthews (Louisville), KY (building still exists), and Fort Lauderdale, FL. I know that Memphis is an A store, Rockford and Louisville were B's. Roanoke and Newport News appear to be B's from the photos, the others I'm not certain of. The kicker for me in this group is the Memphis store. I made a great many business trips to Memphis in the early 90's, and the cool script logos were in place until at least 1995. Now replaced, of course. *Sigh*.

Speaking of Sears, and we were, my friend Didi has posted a couple of photos of a great old pre-1930 Sears store which amazingly is still operating on Chicago’s North Side. Her blog is entitled “Bright Lights, Dim Beauty of Chicago” and covers a great, eclectic variety of subjects. You don’t have to be from Chicago (like me) to enjoy it. Everywhere I go, I run into people who have a warm spot for the Windy City. Give it a click!